Economic Optimism on the Rise
Citi Bank’s mid-year report on Vietnam’s economic outlook reveals encouraging signs, with the country’s GDP growth for Q2 reaching 6.93% year-on-year, indicating a resilient economic recovery. Robust manufacturing, surging FDI, and a remarkable 17% year-on-year surge in exports were the key drivers of this impressive quarterly performance.
Experts predict continued improvement in various economic indicators throughout the remaining months of the year.
Helmi Arman, Citi Bank’s Vietnam Economist, attributes the growth to the acceleration in the manufacturing sector and the recovery of export-oriented industries. Citi forecasts that cost pressures in the industrial sector will ease this year, with inflation likely to remain within a manageable range of 3.5-4%. Despite a high food inflation rate in June, which impacted the overall index, Citi economists remain confident that the 4.5% inflation target will not be breached.
“While there may be adjustments to domestic electricity prices, a weaker-than-expected global growth outlook could lead to a potential decline in oil prices in the latter part of this year and into 2025. This would contribute to reduced transportation costs,” said Helmi Arman. He added that falling rice prices in neighboring countries could dampen Vietnam’s rice exports, leading to lower domestic food inflation. Citi has upgraded its GDP growth forecast for Vietnam from 6% to 6.4% for 2024.
The recently released VIETNAM REPORT on the economy for the first half of 2024 also presents two growth scenarios for the remaining months and the full year, both of which are positively inclined, with GDP growth projections surpassing the target set in the Government’s Resolution 01. If the recovery momentum is sustained in the coming quarters, the GDP growth target of 6-6.5% for the full year is well within reach.
Where to Invest?
In an interview with Tien Phong , Dr. Nguyen Tri Hieu, Director of the Institute for Financial and Real Estate Market Research and Development, shared his insights on the promising developments in the Vietnamese economy during the first half of the year. With positive economic indicators, there is optimism for continued macroeconomic stability, maintained balance in key sectors, and strengthened confidence among businesses and consumers.
Dr. Nguyen Tri Hieu, Director of the Institute for Financial and Real Estate Market Research and Development
According to Dr. Hieu, the stock market is expected to stabilize and perform better in the second half of the year as it reflects the overall economic health. A strong economic recovery in the latter part of the year would be mirrored in the stock market, particularly in sectors related to industrial parks, renewable energy, transportation, and banking.
He also noted that slow growth in bank deposits and declining interest rates have made alternative investment channels like gold and stocks more appealing. However, investing in gold requires caution due to market fluctuations and the potential impact of policy changes. Real estate in urban and industrial areas has been the standout performer so far this year, and this trend is expected to continue in the coming months.
“With positive indicators, stock investment is likely to offer the best prospects. Real estate investment follows, but only in specific sectors. Residential real estate in major cities remains in high demand despite high prices, making it a lucrative investment option,” Dr. Hieu remarked.
At a recent seminar hosted by Dau Tu newspaper, Vo Hong Thang, Investment Director at DKRA Group, offered his insights on the upcoming changes in real estate-related laws. He noted that the new laws on business and real estate investment, land, and real estate business investment, which will take effect in August, are unlikely to bring about sudden changes in prices or supply in the short term. However, in the medium to long term, these laws will enhance market transparency, protect investors, and foster sustainable market development. It typically takes around 6-12 months for the impact of new legislation to be fully realized.
Given the dynamic macroeconomic landscape, Mr. Thang cautions investors against excessive financial leverage. He points out that certain segments, such as vacation real estate, have yet to show signs of recovery. In such an unpredictable market, affordable condominium housing will likely continue its recovery trend and remain the market leader in the final six months of the year.
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